Discovery Laboratories, Inc. (Discovery) is developing a novel drug-device combination therapy, AEROSURF(r) that employs an optimized proprietary capillary aerosol generator (CAG) to deliver aerosolized surfactant (lucinactant) to preterm infants with or at risk for respiratory distress syndrome (RDS) and who may subsequently develop a chronic lung disease known as bronchopulmonary dysplasia (BPD). Lucinactant (SURFAXIN(r) Intratracheal Suspension) is Discovery Labs' proprietary, synthetic, KL4 peptide-containing surfactant that was approved by the US FDA in 2012 for endotracheal administration for the prevention of RDS in preterm infants. This grant proposal is being submitted as follow-on to an SBIR Fast-track grant awarded to Discovery. Phase I supported the development of a clinic-ready CAG device for aerosolization of lucinactant. Phase II funded a completed Phase 2a pilot clinical study in preterm infants on nasal continuous positive airway pressure (nCPAP) with RDS and at risk for developing BPD (disease areas targeted by the NHLBI RFAs). BPD occurs in excess of 30 percent in preterm infants below 32 weeks gestation age, and is a very costly disease associated with significant mortality and long-term morbidity. The primary therapy for RDS is surfactant replacement therapy (SRT) and mechanical ventilation (MV). SRT currently requires intratracheal instillation via an endotracheal tube (ETT) for effective delivery to the lung. Although ETT intubation, MV and SRT are lifesaving, they are associated with iatrogenic complications include airway trauma, increased the risk of infection, and volu- and baro-trauma, all of which have been implicated in the development of BPD. In order to avoid these sequelae, nCPAP is increasingly being used to support preterm infants with respiratory insufficiency. However, use of nCPAP typically precludes preterm infants from receiving SRT, and half of these infants subsequently require intubation, late surfactant therapy, and mechanical ventilation, increasing the risk for BPD. Limited success has been achieved to date in non-ETT delivery of surfactants with existing aerosol generating devices, thus our development of AEROSURF. We plan to evaluate aerosolized lucinactant (AEROSURF) in a larger (n=~240) follow-on study in preterm infants on nCPAP to establish safety and to estimate effectiveness of the drug-device combination product in preventing nCPAP failure, and reducing the incidence of severe RDS and BPD as key outcomes. Specifically, we will conduct a multicenter, randomized, open-label Phase 2b clinical study of two doses of AEROSURF, that are based on outcomes from the phase 2a clinical study. Outcomes will focus on safety (serious adverse events and adverse device events) and efficacy; the later will be assessed primarily by the incidence of treatment failure. Secondary efficacy measures will include improvements in oxygenation and reduction in need for ventilator support (to be assessed through 72 hrs. 7 and 28 days after birth), as well as the incidence of BPD at 36 weeks PMA; follow-up of infants through 1-year corrected age is also planned.